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S.M. 1987-88, c. 51
The Oil and Gas Production Tax Act
(Assented to July 17, 1987)
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
INTERPRETATION
In this Act
"court" means the Court of Queen's Bench; ("tribunal")
"Crown" means Her Majesty the Queen in right of Manitoba; ("Couronne")
"freehold oil and gas rights" means all rights to produce oil and gas in the province except rights
(a) held by the Crown;
(b) held by Her Majesty in right of Canada; and
(c) in Indian reserves; ("droits pétroliers et gaziers")
"gas" means gas as defined in The Mines Act; ("gaz")
"minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; ("ministre")
"oil" means oil as defined in The Mines Act; ("pétrole")
"operator" includes:
(a) the person who has the right to operate a well; or
(b) the person designated by the minister as operator of the well for the purposes of this Act;
whether the person does so directly or through any other person; ("exploitant")
"person" includes an individual, corporation, company, syndicate, trust, firm, partnership, co-owner or party, and includes the successors, heirs, executors, administrators or other legal representatives of any such person; ("personne")
"prescribed" means prescribed by regulation; ("prescrit")
"taxpayer" means any person who is liable to pay any of the taxes imposed by this Act; ("contribuable")
"well" means well as defined in The Mines Act; ("puits")
"working interest" means an interest in a well, or in any oil or gas produced therefrom or allocated thereto, including the mineral right owner's share of proceeds therefrom. ("intérêt d'exploitation")
For the purposes of this Act,
(a) related persons, as determined in accordance with The Income Tax Act (Canada), shall be deemed not to deal with each other at arm's length; and
(b) it is a question of fact whether persons not related to each other, as determined in accordance with The Income Tax Act (Canada), were at a particular time dealing with each other at arm's length.
OIL AND GAS PRODUCTION TAXES
A tax shall be paid at the prescribed rates upon all oil produced in the province from freehold oil and gas rights.
A tax shall be paid at the prescribed rates upon all gas produced in the province from freehold oil and gas rights.
The taxes imposed by this Act shall be calculated and paid in the manner and at the time provided in this Act and in the regulations.
Except as otherwise provided in the regulations, the taxes imposed by this Act upon any oil or gas shall be received by the minister on or before the last working day of the month after the end of the month in which that oil or gas is produced.
The taxes imposed by this Act upon any oil or gas shall be paid by the holders of the working interests in the well from which that oil or gas is produced, or to which it is allocated, in accordance with their respective proportionate shares of the aggregate of the working interests in the well, and, subject to subsection (3), such taxes shall be paid to and collected by the operator of the well in the manner and at the time provided in section 7.
When the holder of a working interest in a well wishes to dispose of his share of the oil or gas produced from or allocated to the well separately from the operator or the holders of the other working interests, the operator shall so advise the minister in prescribed form and the minister may designate the working interest owner as a special operator with respect to that well.
A special operator shall pay the taxes payable by the special operator to the minister in the manner and at the time provided in this Act and section 7 does not apply to the special operator.
Operator to provide information.
Where a holder of a working interest is designated as a special operator with respect to a well, the operator of that well shall provide to the special operator all information necessary to permit the special operator to calculate and pay the taxes payable by him under subsection (2).
Operator to collect and pay to minister.
Every operator of a well from which any oil or gas is produced is an agent of the Crown for the purposes of collecting the taxes imposed by this Act from the taxpayers who hold working interests in the well and who are liable to pay those taxes under subsection 6(1), and of paying those taxes to the minister.
Every operator of a well shall deduct from all amounts payable by the operator to each taxpayer in respect of any oil or gas produced from or allocated to the well for each month the taxes imposed by this Act upon that oil or gas that the taxpayer is liable to pay under subsection 6(1), to the extent that they have not previously been so deducted for that month.
All amounts deducted by an operator pursuant to subsection (2) shall be deemed to have been received by the taxpayer at the time they were so deducted by the operator.
Where, on or before the last day of the month following the month in which any oil or gas is produced, the operator of the well from which it is produced or to which it is allocated has not deducted under subsection (2) from amounts payable by him to a taxpayer an amount equal to the full amount of the taxes imposed by this Act upon that oil or gas that the taxpayer is liable to pay under subsection 6(1), the taxpayer shall forthwith pay to the operator the full amount of those taxes less any amount that the operator has deducted under subsection (2) from amounts payable to the taxpayer in respect of that oil or gas.
All amounts deducted by an operator under subsection (2) and all amounts paid to an operator under subsection (4) shall be deemed to be held in trust by the operator for the Crown until such amounts are paid to the minister pursuant to section 5, and any such amount so held in trust by an operator shall not form part of his estate or property for any purpose but shall be and remain the property of the Crown, whether or not such amount is in fact kept separate and apart by the operator from his own estate or property.
Without limiting the liability of any taxpayer for any of the taxes imposed by this Act, and in addition to any other liability under this Act, an operator of a well who fails to deduct, to pay, or to deduct and pay any amount as required by this section or the regulations is personally liable for and shall pay to the minister an amount equal to the aggregate of all amounts that were not so deducted, paid or deducted and paid, or such lesser amount as the minister may demand, and such amount shall be paid forthwith to the minister in the manner provided in the regulations.
Except as or to the extent expressly permitted by the regulations, no allowance, credit or other deduction shall be made or taken in calculating or paying any of the taxes imposed by this Act.
Books and records to be available.
Every operator and taxpayer shall keep and maintain within Manitoba and make available within Manitoba for inspection, examination and audit under this Act books and records relating to the operations of the operator or taxpayer or make such other arrangements with the minister as may be satisfactory to the minister to make them available for inspection, examination and audit under this Act.
All amounts paid by an operator or a taxpayer to the minister in respect of any of the taxes imposed by this Act shall be accompanied by a return in prescribed form.
The minister may demand in writing, from any taxpayer or from any other person believed to have knowledge relevant to the imposition, calculation or payment of any of the taxes imposed by this Act, that such taxpayer or other person make a return to the minister containing any information necessary to enable the minister to make a full and complete determination of the amount of any of the taxes imposed by this Act or of the liability of any person to pay any of the taxes imposed by this Act, and every such taxpayer or other person, upon receipt of the demand, shall immediately make and deliver the return to the minister.
ADMINISTRATION AND ENFORCEMENT
At any reasonable time, the minister or any person authorized by the minister to do so may enter upon any premises for the purposes of making enquiries, obtaining information and otherwise performing his or her duties under this Act, and for any of those purposes the minister or the person so authorized may use all machinery, equipment, appliances and things as he or she considers necessary or expedient, and he or she shall be
(a) given free ingress and egress to, from and over all buildings and structures used in connection with the operation of any well or any plant or works at which the production from any well is treated or refined in any way or any building or office, whether or not occupied by a taxpayer, at which are kept any books or records pertaining to the operation of any well or the treatment or refining of the production from any well;
(b) allowed to take from any well or from any plant or works mentioned in clause (a), any samples or specimens that he or she may desire for the purpose of determining the quantity or quality of the production from the well or otherwise; and
(c) given full and complete access to all books of account, records, ledgers and other documents kept or used for or in connection with the work and business of any well or with the sale of the production from the well, whether maintained in written, typewritten, printed or photographic film form or entered or recorded by any system of mechanical or electronic data processing or information storage, and may examine the same and take copies thereof or extracts therefrom; but, except insofar as it is necessary to do so for the purposes of this Act, or any other Act administered by the department, any information acquired under this section shall not be communicated or disclosed to anyone in such a manner that it is possible from any such communication or disclosure to relate any such information to any taxpayer or to any other person from whom it was so acquired.
Every person who fails to file a return within the time prescribed or who fails to file a complete return is liable to a penalty to be assessed by the minister, not exceeding $100. for each day during which the failure continued, and any amount assessed under this section shall be conclusively deemed to be tax payable under this Act.
Requirement of additional information.
The minister may, for any purpose relating to the administration or enforcement of this Act, by registered letter or by demand served on a person, require the person, within such reasonable time as is stipulated in the letter or demand
(a) to provide any information or additional information, or, to submit any return or supplementary return to the minister;
(b) to produce to the minister any book, record, writing or other document; or
(c) to make certain books, records or documents, or information, available to the minister or to a person designated by the minister.
Failure to supply information.
Every person who fails to comply with a requirement of the minister under subsection (1) is liable to a penalty to be assessed by the minister, not exceeding $200. for each day during which the failure continues, and any amount assessed under this section shall be conclusively deemed to be tax payable under this Act in addition to any other tax payable under this Act.
Except as otherwise expressly provided in this Act or the regulations, any penalty provided for in this Act may be imposed notwithstanding that some other penalty may also be imposed in the same or similar circumstances.
Every person who knowingly fails to deliver any return, notice or other document that he is required to deliver under this Act, or who knowingly fails to complete any information required on any such return, notice or other document, is guilty of an offence and is liable
(a) in the case of any return required by section 10, to a fine of not less than $1, 000. and not more than $10, 000., or to imprisonment for a term of six months, or to both, and, in default of payment of such fine, to imprisonment for a term, or additional term, of six months; or
(b) in any other case, to a fine of not less than $100 and not more than $5, 000.
Every person who knowingly makes or signs any false statement or furnishes any false or incorrect information to the minister or to any officer of the department with respect to any matter or thing with respect to which information is required under this Act, or who keeps or causes or permits to be kept any false or incorrect books of account or other records regarding anything required under this Act, is guilty of an offence and is liable to a fine of not less than $1, 000. nor more than $10, 000., or to imprisonment for a term of six months, or to both, and, in default of payment of any such fine, to imprisonment for a term, or additional term, of six months.
Every person who, in any manner whatever, wilfully attempts to evade payment of any of the taxes imposed by this Act, or who conspires with any other person to evade payment of any such taxes, is guilty of an offence, and is liable on summary conviction to a fine of not less than 25% and not more than double the amount of tax sought to be evaded or to imprisonment for a term of six months, or to both, and, in default of payment of any such fine, to imprisonment for a term, or additional term, of six months.
Where a corporation is guilty of an offence under this Act, any director, officer or agent of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence, and is liable to the punishment provided for the offence.
For purposes of the enforcement procedures set out in sections 17 to 19, a person shall be deemed to be a debtor of the government in one or more of the following circumstances:
(a) the person has received a demand for payment of tax under subsection 7(6);
(b) the person has declared, or agreed to, a tax liability in any form of writing, including the issuing of a cheque on which payment has not been honoured for any reason;
(c) a court action by the government to recover moneys as a debt due by the person under this Act has been finally resolved in favour of the government;
(d) the government has commenced a court action to recover moneys allegedly owing by the person as a debt due to the government under this Act.
Where an enforcement procedure set out in sections 17 to 19 is used to recover moneys in the circumstances described in clause (1)(d), the moneys recovered shall be paid into court and, upon final resolution of the court action, shall be paid
(a) to the government, to the extent required to satisfy the judgment in the court action and any costs thereof assessed against the debtor; or
(b) to the debtor, to the extent that the moneys are not required for purposes of clause (a).
Application by alleged debtor.
Where an enforcement procedure set out in sections 17 to 19 has been or is being used to recover a debt allegedly owing by a person who is not deemed to be a debtor of the government under subsection (1), the person may, within 30 days of the exercise of the enforcement procedure or within such further time as the court may allow, apply to court for an order under subsection (4).
Where, upon hearing an application under subsection (3), the court is satisfied that the applicant owes no debt to the government, or owes a smaller debt than the government has alleged, the court may
(a) where applicable, order immediate termination of the enforcement procedure; and
(b) order the government to make restitution to the applicant in an appropriate amount, including any moneys reasonably expended by the applicant in applying for the order.
Taxes a debt, and a lien and charge.
Any tax, penalty or interest payable under this Act
(a) is a debt due to the Crown and is recoverable as such in court or in any other manner provided in this Act; and
(b) constitutes a lien and charge on oil or gas in respect of which it is payable and on all machinery and equipment situate upon or connected with the parcel of land used in the production and removal of the oil or gas; and the lien and charge to which clause (b) refers has priority over all other mortgages, charges, liens and encumbrances, except a lien for wages under The Builders' Liens Act or The Payment of Wages Act.
Exercise of power to recover debt.
The powers conferred upon the minister by this Act for the recovery of tax, penalties and interest may be exercised separately or concurrently or cumulatively; and the liability of a person for the payment of the same under this Act is not affected in any way by the fact that a fine has been imposed on or paid by the person in respect of an offence pursuant to section 15.
Lien and charge in case of insolvency.
In the case of the insolvency of any person, or the liquidation of any company, from whom or from which a debt is due under the Act, the amount of the debt is a lien and charge on the estate and assets of the person or company, subject to any statute of Canada and to the costs and charges of insolvency or liquidation proceedings.
Demand on person indebted to owner.
Where the minister is informed or suspects that a person is or is about to become, indebted or liable to make any payment to a debtor of the government, the minister may, by registered letter or by letter served personally, demand of that person that the moneys otherwise payable by that person to the debtor of the government be paid, in whole or in part, to the minister.
Discharge of liability to debtor.
The receipt of the minister for moneys paid pursuant to a demand made under subsection (4) constitutes a good and sufficient discharge of the liability of the person to the debtor of the government to the extent of the amount received by the minister.
Liability to pay under demand;
Any person discharging any liability to a debtor of the government after receipt of a demand tinder subsection (4) is personally liable to the Crown to the extent of the lesser of
(a) the liability discharged as between that person and the debtor of the government; and
(b) the liability of the debtor of the government for a debt payable to the government under this Act, including interest and penalties thereon.
A letter served under subsection (4) shall be deemed to have been served personally on a person engaged in business if it has been left with an adult person employed at the place of business of the person.
Service of demand in business name.
Where a person who is, or is about to become, indebted or liable to a debtor of the government carries on business under a name or style other than the person's own name, the registered or other letter under subsection (4) may be addressed to the person in the name or style under which the person carries on business.
Service Of demand on partnership.
Where the persons who are, or are about to become indebted or liable to a debtor of the government carry on business in partnership, the registered or other letter under subsection (4) may be addressed to the partnership name; and the letter under subsection (4) shall be deemed to have been served personally on all the partners if it has been served on one of the partners or left with an adult person employed at the place of business of the partnership.
In addition to any other remedy given by this Act for the recovery of a tax levied under this Act, where the tax is overdue and unpaid, or the minister is of the opinion that payment of a tax accruing due, or to become due, is endangered, the minister may apply to a judge of the court for
(a) an injunction; or
(b) the appointment of a receiver with all necessary powers; or
(c) such other order or relief as to the judge may seem necessary or expedient, under the circumstances of the case; to secure payment of the tax due, accruing due, or to become due, or to prohibit, prevent, or restrict,
(d) the removal or transportation of any oil or gas; or
(e) the transfer, assignment, or transmission, of any title to oil or gas, or any interest therein, or title to land in a producing area in, on, or under; which oil or gas is or may be situated, or a share or interest therein; or
(f) the operation of any oil or gas well in a producing area; or to provide for the operation of an oil or gas well in such a manner, or subject to such conditions, as to the judge may seem necessary or expedient under the circumstances of the case; and the judge may make an order for the injunction, the appointment of a receiver, or other relief as hereinbefore mentioned.
Any tax, penalty or interest payable under this Act and remaining unpaid, in whole or in part, may be certified by the minister after the expiration of six months from the time the tax, penalty or interest is levied and the minister may register the certificate in the Land Titles Office of any Land Titles District and, from the time of the registration, the certificate is a charge on all lands of the debtor against which the certificate is registered by instrument charging specific land, and, while registered in the general register, against all lands of the debtor in the Land Titles District in which it is registered that are held in a name identical to that of the debtor set forth in the certificate whether or not the lands are registered under the Real Property Act.
Registration and effect of certificate.
On the production thereof to the court, the certificate shall be registered in the court and, from the date of the registration, is of the same force and effect, and all proceedings may be taken thereon, as if the certificate were a judgment obtained by the Crown in the court against the taxpayer for the recovery of a debt of the amount specified in the certificate.
All reasonable costs and charges attendant upon the registration of the certificate are recoverable in like manner as if they were part of the judgment.
Warrant against personal property.
The minister may issue a warrant for the amount of debt due to the government under this Act, together with costs, expenses and poundage of the sheriff, directed to a sheriff, and the warrant has the same force and effect, and is subject to the same exemptions, as a writ of fieri facias issued out of the court.
Goods or property seized under a warrant issued in accordance with this section shall be kept for 10 days at the cost and charges of the debtor; and if the debtor does not pay the amount due, together with costs and charges within 10 days, the goods and property seized under warrant may be sold by public auction.
Notice of the sale under subsection (5) setting forth the time and place thereof, together with the general description of the goods and property to be sold, shall be published at least once in a local newspaper of general local circulation.
Any surplus resulting from the sale of goods or property under this section, after deducting the amount owing by the debtor and all costs and charges, shall be paid to the debtor.
Demand for payment if debtor is leaving Manitoba.
The minister, if he or she suspects that a debtor is about to leave Manitoba may, for that or any other reason, by notice sent by registered mail to the debtor demand payment of all taxes, interest, penalties and costs for which the debtor is liable; and the debtor shall, notwithstanding any other provision of this Act, pay them within 10 days from the date of receiving the notice.
Seizure of goods upon non-payment.
Non-payment of the taxes, interest, penalties and costs within the specified time renders the goods and property of the debtor liable to seizure by the sheriff of the district within which the goods and property of the debtor are situated.
Certificate to authorize seizure.
A certificate of non-compliance with any such demand, signed by the minister, setting forth the particulars of the demand and placed in the hands of the sheriff, is sufficient authority to the sheriff to seize sufficient of the goods and property of the debtor to meet the demand and subsections (4) to (7) apply to the seizure.
For the purpose of carrying out the provisions of this Act according to their intent, the Lieutenant Governor in Council may make regulations
(a) prescribing forms of returns to be used in making payments of tax under this Act;
(b) prescribing information to be given in returns to be used under this Act;
(c) prescribing rates of tax to be paid on gas;
(d) prescribing rates of tax to be paid on oil;
(e) prescribing any other thing which is required by this Act to be prescribed.
Regulations made under clauses (1)(c) or (d) may be made retroactive to a date not earlier than April 1, 1987.
The Lieutenant Governor in Council in making regulations under clauses (1)(c) or (d) may establish classes of oil or gas based on such criteria as to the Lieutenant Governor in Council seems appropriate including
(a) the method of production; and
(b) the day on which the well came into production; and may set different rates for the different classes.
Where a regulation under clause 20(1)(c) or (d) prescribes a tax payable on the fair market value of oil or gas the minister may determine the fair market value of the oil or gas for the purposes of this Act and, in particular, the minister may determine that persons are related or that persons were not dealing with each other at arm's length and that sales between those persons do not represent the fair market value of the gas or oil.
Within 90 days of paying the tax, the taxpayer may appeal to the court the decision of the minister under subsection (1).
TRANSITIONAL AND REPEAL
Subsec. 2(1) of Oil and Natural Gas Tax Act am.
Subsection 2(1) of The Oil and Natural Gas Tax Act, chapter 035 of the Continuing Consolidation of the Statutes of Manitoba, is amended by adding in alphabetical order the following clauses:
(b.3) "EOR incentive period" means the period in respect of a well in a new or enlarged enhanced oil recovery project approved under The Mines Act on or after January 1, 1987, commencing
(i) the first day of the month in which the new or expanded enhanced oil recovery project is fully implemented, or
(ii) the first day of the month following the month in which the production incentive period for the well expired, or
(iii) the first day of the month in which the final holiday oil volume for the well was produced, or deemed to be produced, whichever is the later, and continuing for such number of production months as may be determined under The Mines Act; ("période d'encouragement à la RAP")
(d.1) "holiday oil" means the initial volume of oil produced, or deemed to be produced, from a new well drilled and completed on or after January 1, 1987, as determined under The Mines Act. ("pétrole exempté")
The Oil and Natural Gas Tax Act is further amended by adding immediately after subsection 4.1(2) the following subsection:
Notwithstanding any other provision of this Act, no tax is payable on holiday oil.
Schedule D of The Oil and Natural Gas Tax Act is amended by adding at the end of the heading of the fourth column "or a new or developed well within its EOR incentive period".
This Act may be referred to as chapter O37 of the Continuing Consolidation of the Statutes of Manitoba.
This Act except sections 22, 23 and 24 shall be deemed to have come into force on April 1, 1987.
Sections 22, 23 and 24 shall be deemed to have come into force on January 1, 1987.
The Oil and Natural Gas Tax Act, chapter 035 of the Continuing Consolidation of the Statutes of Manitoba, is repealed effective March 31, 1987.